Client Payment Ethics

How many of you experience bad behavior regarding payments not being received. I vote that we have a list of people who are poor with this. Partners and I are sitting ducks because client will only pay in Dec instead of today!

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I have had some clients who were totally inconsiderate regarding payments - and would make up their own rules about when to pay me for services rendered, even after agreeing terms. Fortunately I have moved away from these clients and now have clients who are considerate, supportive and professional. I'm in favour of seeing such a list of poor payers.

There is definitely a culture of non-payment for services rendered in South Africa today. From just ignoring your invoice, to only paying a part of your invoice, to making promises that payment WILL happen (and then nothing happens) to just plain lying about making payments. It is definitely bad behaviour and very definitely questionable ethics.

However, let's lead by example and remember our own values. We live in trying and interesting times.

I work with companies on Stakeholder Management issues and facilitate a program called Stakeholder Reputation Management. On the 2nd day I always end off the Master class by getting delegates to develop a set of ground rules of engagement with Stakeholders including a list of tips on how to foster better relationships and reputation.

The title of this article is what the one group suggested.

Differentiate your Suppliers and pay them accordingly.

This really made me think, and prompted me to share a very disturbing trend on my blog at the time.

I run a one- person consultancy. My cash flow is key to business continuance. Yet, this year I have had spend more time on collecting money than ever before.

This is what is happening:

1. Managers attend courses and events. I advertise events as prepaid. Registration forms are completed and signed and invoices promptly sent out. But that is where it ends. I meet these lovely & dedicated people and work with them. However, now comes the crunch – To get my money.

Sometimes I have to wait up to 9 weeks to get paid. And, I have to deal with unhelpful back office staff.

Even worse, the lack of attention is frightening. How can it take 2 weeks for a clerk to inform a secretary that the VAT number she gave the client is wrong and that they need an amended invoice?

Even worse, my own Bank sent a senior manager on course and it took them 8 weeks to pay me. Yet, if I go over my overdraft limit by R2 they have the audacity to sms me that same day. Is that fair? In fact, it is 6 months since it happened and I am still angry about it.

How on earth does it take 5 days to process a payment? That after they have all the documents and the invoice? It is nothing other than an admittance of poor administration and stalling payments.

Recently I even wrote to the Head of Finance on two occasions to get paid. He did not even bother to respond.

2. The new tendency. In order for a manager to attend a once-off event I need to complete supplier database forms that need to be signed off by the Bank, sometimes SARS and often by a Commissioner of Oaths.

Sometimes I am sent these documents after an event – and it can take a day out of my time to comply with all this administration. Billable consulting time. Who says I want to be an official supplier? Surely there must be a way to fast track certain expenses?

3. Supplier Database Forms ask for your type of business.

Why I don’t know. What difference does it make? If you state that you are a SME or sole proprietor, it makes no difference. In fact, you will probably be paid even later than some of their key clients.

Yet the South African Government wants to assist SME’s. Companies write that they care for their customers and suppliers. Well, if they did their systems and service surely do not suggest that.

I agree with that group.

Why can they not:

Fast track sole proprietor and SME payments? (Or do they not understand the different problems experienced by different types of businesses?)

Why is there no provision for once-off payments such as event attendance?

Why can managers who attend courses and events, not accept the responsibility for following up the payment of that supplier?

Why can they not respect my payment terms?

Something is clearly wrong with Stakeholder Management in companies and there is no better place than to witness the lack of focus and lip-service than getting your invoice paid.

If companies were really stakeholder management focused, they would pay more attention to their service providers needs and expectations. As an external service provider who often has already rendered a service, I expect my payment terms to be respected. I expect them to be more sensitive to my needs.

I am not interested in the internal systems and procedures. That’s your problem.

Pay my invoice on time.

It is simple. Differentiate your suppliers and pay them accordingly. Surely it is not that difficult.

Hi Tass I second your vote regrading the "Bad Payers List" I have total and complete empathy with you and your partners. I was shafted yesterday, again with an excuse and a promise to pay later! So please take a little solace in the fact that you are not alone today in feeling like you have been used and abused.

I add my voice to indicate that I am in the same position. And in economic times such as this, it is killing my business. Try being honorable in paying salaries of the two people in employment who has worked their butts off to please the client who has never agreed with me om payment terms to be 60 days. Keep my values upheld in paying for printing services, development fees and all other business related costs when today on the second of the month I get the response from the payments clerk (for the past 3 years) that payments are now done from India and she has nothing to do with it! Now I don't even have somewhere to follow up and negotiate anything with.

I would love to 'black-list' them, but they are one of my main sources of income..... where is the tipping point?

Deon, your article should be published in every magazine and newspaper and should form the basis of a good debate on Redi's 702 talk show! We are encouraged to develop the SME sector, yet all the red tape in companies and even the supplier database forms are obstacles that kills cashflow, let alone opportunities to expand our businesses and create employment opportunities.

I find that it is often the larger companies that are the worst payers.

I reached the point where I talk directly to the person (often the MD) who contracted my services in the first place. I normally say something like "you and I had an agreement; I notice that I have not yet been paid. Were you dissatisfied with the service you received?" They normally feel quite embarrassed and my payment is processed without delay.

When dealing with the back office staff I ask "have you received your salary this month?" Obviously they did. I then say "what would you have done if your company delayed the payment of your salary?" If I was promised payment on a particular day and the payment was not processed, I send emails (and copy the MD) day after day after day. December is usually the worst month for receiving payment. Companies happily close their doors for the festive season delaying payment until mid January, not giving the poor self-employed consultant/service provider a second thought.

Where is the ethics in that? So yes, let's start a bad-payers list - maybe then someone will sit up and take note...

Agree that Deon's article summarises it perfectly. What about Carte Blanche?

I know that there was a special 'desk' in the presidential office established recently to deal with the issues of small business and government - which is a 'client' you don't want to even think about..... but corporates are getting just as bad I think.

Yes please can we have a bad payer's list. I do not have much of this, as we just do not deliver material until payment has been received, but I have been taken in by a specific client who also did not pay some clients of mine. It seems that certain service providers just make a habit of enriching themselves by simply not paying suppliers and, really, everyone should be warned about this.